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Informist, Monday, Feb. 3, 2025

 

By Avishek Rakshit

 

KOLKATA – Even as consumer demand remained muted owing to macroeconomic headwinds, the festival season provided some respite to companies operating in the discretionary goods segment, albeit for a very short period. Retailers having a larger presence were able to reap most of the benefits of the pent-up demand in the festival season, and Trent Ltd. was no exception.

 

 

One of the largest retailers in the country, Trent Ltd is expected to report a sharp 51.9% on-year jump in its net profit for the December quarter to INR 5.2 billion, and revenue is expected to surge by 40.0% on year to INR 46.4 billion, according to the average of estimates from seven brokerages.

 

Sequentially, the profit could rise by 23.2%, and revenue could surge by 14.9%. The company had reported a net profit of INR 3.4 billion in the year ago quarter and INR 4.2 billion in Jul-Sept. Its revenue was INR 33.1 billion in Oct-Dec of 2023-24 (Apr-Mar), and INR 40.4 billion in Jul-Sept.

 

The company will declare its results for Oct-Dec on Thursday. At the current price, Trent's scrip has fallen 5.7% since NOv. 7, when the company announced its September quarter earnings. The scrip had hit a high of INR 7,015.3 and a low of INR 6,306.9 on that day. Monday, shares of Trent closed 0.9% down at INR 6,135.1 on the National Stock Exchange.

 

Among the brokerages, Nuvama Wealth Management Ltd. is most bullish on the company's profit, estimating it the highest at INR 5.7 billion, while HDFC Securities Ltd. has estimated it the lowest at INR 3.8 billion. Kotak Institutional Equities has the highest revenue estimate at INR 47.2 billion and Axis Securities Ltd. has the lowest revenue projection at INR 45.7 billion.

 

The vast difference between the brokerages in their estimates is on account of difference in estimates of consumer demand and revenue contribution from stores.

 

In a note, Kotak Institutional Equities said that its estimates are based on factoring in 56 new Zudio branded stores and four new Westside branded store additions sequentially. Besides, the brokerage is of the view that Trent's revenue per square foot of sales is expected to increase by 5% on year driven by addition of larger-sized stores.

 

Nuvama, which is estimating a net addition of 57 fashion stores, is of the view Trent could register 12% like-for-like growth in its fashion portfolio.

 

In its 57th Retail Business Survey, Retailers Association of India said that during the festival season, the retail segment in the country grew 5% on year and the apparel and clothing segment, where Trent operates in, has been one of the key beneficiaries of this festival demand as retail sales in this sector surged by 7% on year.

 

However, inflation and other payment obligations like equated monthly instalments for previous purchases are continuing to weigh on discretionary spending, Retailers Association of India said.

 

Trent is expected to report an earnings before interest, tax, depreciation, and amortisation of INR 8.3 billion, according to the average of estimates from six brokerages. The highest EBITDA estimate is from Kotak Institutional Equities at INR 8.8 billion and the lowest is from HDFC Securities at INR 6.6 billion.

 

Following are the Oct-Dec earnings estimates for Trent based on reports from seven brokerage firms in the descending order by the estimate of net profit:

 

Brokerge Name	Net Sales (in million rupees)	Net Profit (in million rupees)	EBITDA (in million rupees)
Nuvama Wealth Management Ltd	46,373.00	5,744.00	8,565.00
Systematix Shares and Stocks (India) Ltd	46,209.00	5,549.00	8,502.00
Kotak Institutional Equities	47,199.00	5,495.00	8,756.00
Motilal Oswal Financial Services Ltd	46,375.00	5,449.00	8,718.00
Sharekhan Ltd	46,370.00	5,350.00
Axis Securities Ltd	45,710.00	5,140.00	8,670.00
HDFC Securities Ltd	46,400.00	3,800.00	6,600.00
Average	46,376.57	5,218.14	8,301.83

 

Shares of Trent closed 0.9% down at INR 6,135.1 on the National Stock Exchange. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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